Government spending on construction helped boost the Philippines economy, officials said Thursday, adding that growth in the second quarter had put Manila in striking distance of its full-year target.

Data showed the economy expanded 1.5 percent year-on-year in the three months to June, which although down from the 4.2 percent recorded in the same period last year, was up from a revised 0.6 percent in the first quarter.

The government said the figures showed that while many of the Southeast Asian nation’s neighbours remained mired in recession, the Philippines continued to achieve growth.

Job seekers browse employment listings during a job fair at a mall in Manila June 18, 2009. (Reuters)

In the first six months the economy expanded 1.0 percent year-on-year, down from the 3.8 percent seen at the same point in 2008.

However, Manila said it was now close to being able to hit its full year growth target of between 0.8 and 1.8 percent.

“With the coming election spending and Filipinos’ penchant for Christmas spending, 1.8 percent (GDP growth), I think is possible,” Santos told reporters, referring to spending for the May 2010 national elections.

Growth was helped by improving exports, which are key to the economy. Although shipments in June fell 24.7 percent year-on-year, they have been steadily rising and were 10.4 percent higher than the previous month.

The government also put aside 330 billion-pesos (6.75 billion-dollars) in its 2009 budget to pay for various projects to boost spending at home.

Construction, government spending and a modest recovery in personal consumption led to 3.1 percent growth in the services sector in the second quarter.

Security Bank economist Patrick Elia told AFP he expected a bounce in the second quarter, adding: “We have seen a bottom in the second quarter and this is merely a reflection of the recovery.

“Consumption is up and really hammers the point that this is a real recovery and we should see it continue as we roll into the third and fourth quarters,” said Elia, who estimates consumption accounts for at least 75 percent of GDP.

Personal consumption rose 2.2 percent from a year earlier in the second quarter, up from a 1.3 percent clip in the first quarter.

On a seasonally adjusted basis, gross domestic product (GDP) grew 2.4 percent in the first quarter after a 2.1 percent contraction in the previous three months.

However despite the upbeat figures, the per capita GDP fell 0.5 percent to about 937 dollars.

Dennis Arroyo, a senior economic planning ministry official, said many Filipinos had previously stopped spending through fear that many of the country’s 8.7 million overseas workers could be affected by job losses as a result of the global slump.

However, with key labour hosting nations such as Taiwan hiring foreign workers again, he said “the fear is abating”, helping boost consumption at home.

This month the central bank said a record 1.5 billion dollars was sent back in June, up 3.3 percent year-on-year, adding that it expected its foreign workforce to pump around 16 billion into the economy by the end of the year.